Iran Oil Embargo Has Ripple Effect for Europe

An oil tanker is seen off the port of Bandar Abbas, southern Iran, on July 2, 2012.

The six-month run-up to the implementation of a full European Union embargo on Iranian crude left many market watchers complacent about the impact sanctions would have on consumers in Europe.

By the time July 1 rolled around, most European refiners had already replaced Iranian oil with crude from other countries like Saudi Arabia, Russia and Iraq and oil prices were hovering near their lowest level since May.

And yet a significant dent to one Italian refiner’s profits in the second quarter suggests that although European refiners have kept the oil flowing, the cost of sanctions could still prove problematic.

“This movement of the market has been partially offset by the temporary disoptimizations on the availability of heavy crude oils, ahead of the oil embargo in Iran,” Chairman Gian Marco Moratti said in a statement by way of explanation.